2021 is about recovery. Not only for the stock market but also for mankind. It is when vaccines get global and humans fight coronavirus back. For years, this is the best and maybe the happiest year for us. To see how people survive against the worst. But we won’t discuss it. November 2021 investing insight is a collection of our brainstorming with regard to market and investing. We make it into one article since it is too short to launch in one long post, but it is too precious to hide.
In This Issue
November 2021 Investing Insight: Time Constrained Activity.
I tell you one of the best investing ideas. Buy a thick of ice about 100 ft2 wide located in 40.7128° N, 74.0060° W. Then let it compound itself. In 2021, that place worth more than $1 million. It is in New York. That thick ice is a condition more than 20 thousand years ago. This stupid idea we take to emphasize you one thing that you can control in investing.
None live that long. Some people, may not see their investing return. Not because they pick the wrong stock, but because time takes longer than their life. Thus, we encourage you to change your mindset. Do not think it is a marathon. Think of it as a relay race. You can inherit your knowledge, your mindset, your experience. Some of us may not sit under the shady trees we plant, but your son, your grandson, may. Pandemic tells us that, like Casting Crowns said, I’m, vapor quickly fading, here today and gone tomorrow.
Future tells us nothing. Future also doesn’t tell Jim Cramer or Cathy Wood. So don’t time your investment.
Another element that haunted us, unfortunately, others often overlook it. The idea in investing is simple, You invest in certain assets since you expect it worth more than today. You buy Tesla since you believe EV makers will rule out the autos’ industry. You buy DoorDash due to its prospect as a food delivery service. You buy Teladoc because it disrupts medical services.
Do you ever think what if all of those scenarios do not happen? The investor needs to consider this. This is why we – investingdeck.com – focus on composing articles dealing with economic moat, business advantage, business model. All to uncover risk hidden from our decision.
All those topics serve as “tests” for our investing idea. On some level, it mimics durability tests for certain products. Our competitive advantage article tests the durability of investing ideas – or, to be more specific, earning durability of companies.
Never test your investing idea? It looks like buying a laptop from an unknown Chinese manufacturer with no quality control.
November 2021 Investing Insight: Beyond Number
Paraphrasing Mark twain, there is a lie, damn lie, and number. Investing is not merely about numbers. Ever go to the doctor or hospital? Patients get checked their temperature, blood pressure, further, the TCG number, etc. The doctor then sees the number and makes diagnose. You could mimic that knowledge just by googling. Find out the combination, if your TCG and blood pressure are high, it is likely you have a bad diet and lifestyle. So, just reading the number can make you a doctor?
A good doctor knows, not only by number but also by talking, seeing, touching his patients. Also by experience. Investing is the same, you can go to yahoo finance or, CNBC or macrotrends.com and find the number. Earning, Revenue, cash Flow, P/E ratio. But reading the number doesn’t make you a good investor.
The Slowest Element of Evolution
Mankind has transformed from agriculture-centric to industrial in the 17th century. The so-called industrial revolution has disrupted how products are created. After the boom of the internet and smart devices, mankind, once again, experienced a transformation. It is cloud everywhere and devices could talk to each other via the internet. After hundreds of years, after all this advancement and miraculous achievement, people are still the same.
There is still a hunger for power, money. There is still poverty, hatred, selfishness, fear. And, the best of them, there is an institution that is composed of a large number of that imperfect people. And there is a country, a government, that…we can’t continue.
Mankind emotion is left behind their own achievement.
And this is a perfect opportunity for investing.
Somehow, one decision interacts with another to create an opportunity. When there is euphoria, overbought, overvalue asset – somehow, someday, it will ack to its normal value. Or, if there is a undervalue asset, it will someday back to the fundamental.
We just can’t time it. (Back to session one)
November 2021 Investing Insight: The Exceptional Enterprise
We are tickled to comment about the Big Fives: Facebook, Google, Amazon, Apple, and Microsoft. In the history of investing or US economics, there is never been a company or group of companies that hold such a growth, power, and durable competitive advantage like those fives. They have a global scale, and also their business castle is impenetrable.
2005, September. It was ExxonMobil with its massive scale become the top of US stock. At that time, the oil producer was worth more than $400 billion. Unsurprisingly enough, if, using that time logical frame, Exxon has global scale and its product is needed every time. become the darling of Wall Street was no doubt.
But the big Five is far beyond Exxon.
Companies like Facebook, Amazon, Google are accessed by people, not every but maybe every millisecond. Around the world. The scale, the demand is unmatched. Our wild thought says that to stop this superpower entity need governments around the world to just reset the internet. But it is not easy and maybe impossible.
Tesla does not have this privilege. It has no global reach like Exxon. Becoming top rank of the US stock market may be within its reach, but it will not sustain. Big Fives, in our opinion, will still reign.